MyLawsuit.com is still more a concept than a company, with a Web page that promises "Coming soon.'' But inside her work space at a Palo Alto start-up incubator, Michele Colucci can tick off the ways her idea for bringing the legal marketplace into the Internet age has progressed since her summertime move from Los Angeles to Silicon Valley.

Even as America staggers into a recession, Colucci personifies how Silicon Valley's entrepreneurial culture is showing remarkable resilience, even defiance.

Venture industry data suggests that early-stage investing is slowing down, and many angel investors are said to be pulling back. But at recent valley conferences, prominent investors such as angel "godfather" Ron Conway said they are hearing many pitches and have money set aside for promising start-ups. The "deal flow," as Conway put it, remains strong.

Serial entrepreneur Dave McClure, considered a start-up guru, says the valley's entrepreneurs are "absolutely" as enthusiastic as ever: "Perhaps it's misplaced," he added with a laugh, "but it's just as strong."

Colucci is perfecting her pitch, winning over angel investors and recruiting a team for her dream. A former Google ads pro is plotting online marketing and a Stanford University math student is communicating with a software team in India. And she is in talks with prominent venture capitalists. Whether MyLawsuit flies or flops, Colucci figures Silicon Valley is the only place she could put it together so quickly.

"It's the only place in the world that recognizes 'serial entrepreneur' as a job title," she said.

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Silver linings

The ugly economic outlook has valley venture capitalists and entrepreneurs looking for silver linings. On panels and in blogs, they point out that the likes of Apple and Microsoft were launched in tough times, while the dot-com bust gave rise to such billion-dollar babies as YouTube and Facebook. While the financial industry melted down and Washington went into crisis mode, start-up showcases at the Plug & Play Tech Center in Sunnyvale and the Microsoft campus in Mountain View brimmed with entrepreneurial optimists.

One recent morning, two partners from First Round Capital hosted "Office Hours" at a Palo Alto cafe — an open invitation to entrepreneurs. "We had about 60 companies show up," Rob Hayes said. "There's still a lot of people out there who want to start companies and want to learn how.''

Start-up founders, McClure and others say, have to recognize that there is less money available and contract terms won't be as favorable as before. Tough times mean that many venture firms are expected to hold money in reserve for later-stage rounds for maturing portfolio companies trying to weather the recession.

Many large venture firms were already focusing more on less risky, later stage investments, some VCs say. But that trend created an opening for a new wave of early-stage and "seed'' venture firms such as True Ventures, Alsop Louie Ventures and SoftTech VC. Meanwhile, several start-ups have been launched on shoestring budgets through "boot camp" programs like YCombinator and LaunchBox.

Helping to spur innovation is the fact that advancing technology and the Web's maturity have driven down the cost of launching Internet companies. Some entrepreneurs are surprised to find their funding requests are regarded as too small.

Syncplicity founder Leonard Chung, who is 28, learned that lesson in start-up economics on the way to securing $2.35 million in first-round funding from True Ventures. A partner at a larger venture firm, Chung said, was impressed with Syncplicity's data-management technology and business plan, but balked at Chung's initial "ask," or request, of $2.2 million.

"He said that's not big enough," Chung recalled. "He said, 'I need an answer on this: How can you tell me with some level of confidence that I'll be able to invest $10 to $15 million over time?' That's the thing I could never answer."

Syncplicity, Chung figures, simply shouldn't need that much money to succeed. In his pitch, Chung suggested Syncplicity match the success of Mozy, a data backup company that Josh Coates founded in 2005 with $1.5 million in venture backing and sold to EMC only two years later for $76 million.

In the end, Chung decided to take $150,000 more than his "ask" to address the economic downturn.

Running lean

Conway and star entrepreneurs like Marc Andreessen say start-ups should try to raise as much as possible. But Mozy founder Coates said he turned away VC interest once he had enough to execute the business, and that Chung was wise to do so as well. A lean budget encourages smart decisions, Coates said, and "raising a lot of money makes you stupid."

Like many start-up founders, MyLawsuit's Colucci is seeking the right formula. At age 43, raising three sons while working through a divorce, Colucci stands out among the prototypical techies who live on Top Ramen and sleep at their cubicles. She was an attorney who later applied her entrepreneurial instincts to Hollywood as a writer and producer.

Colucci said she's been impressed by how so many successful people in the valley, unlike Hollywood, try to help others succeed, opening doors and suggesting solutions. She's had coaching from Astia, a group specializing in women entrepreneurs. One associate pointed her to the Indian software team building an engine to match lawyers with prospective clients.

Stanford student Cisco Riordan, a 20-year-old junior, joined the MyLawsuit team after hearing Colucci's presentation at Plug & Play. And Colucci's pitch to Sand Hill Angels impressed Christy Cooley, who had worked at a couple of start-ups before joining Google in 2002.

Cooley, having prospered on options, decided to return to the start-up world as an angel investor, but the recession has made her more conservative. At MyLawsuit, her investment is "sweat equity."